January 3, 2006

Proposed Bulletin for Good Guidance Practices

Key materials
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Highlights

The Regulation

  • Guidance documents-agencies' non-binding interpretations of either their own regulations or congressional statutes-come in many forms and may include policy statements, policy clarifications, policy directives, compliance directives, enforcement guidelines, inspections plans, opinion letters, question-and-answer bulletins, etc. Citing concerns that agencies have resorted to the use of guidances as a means of avoiding public notice and comment and creating de facto "backdoor" regulation, the Office of Management and Budged (OMB) recently released a Proposed Bulletin for Good Guidance Practices (GGP). 

Our Findings

  • There are many instances of guidances either masquerading as binding regulations or having the same effect. In 1999, a guidance letter from the Occupational Health and Safety Administration (OSHA) to a Houston company stated that OSHA regulations applied to employees working from home. Although technically not binding, the letter caused near panic among employees and employers and threatened the expansion of popular work at home programs. Fortunately, OSHA quickly withdrew the letter, but this is merely one of many examples of the misuse of guidances, which might have been identified or avoided by the use of a period of public notice and comment.
  • Although they are legally non-binding, guidances usually resemble binding regulations and often contain language implying that they carry the force of law. Therefore, it is encouraging that GGP mandate a period of public notice and comment for "significant guidance documents" and prohibit the use of language that might imply that that the guidance document carriers the force of law.
  • Prior to its abolition by Congress in 1995, the Administrative Conference of the United States (ACUS) persistently recommended that APA procedures be expanded to non-binding interpretive rulemaking. Although not going quite as far as ACUS, OMB's GGP do incorporate many of their suggestions. Although their actions might be improved by a few minor additions, OMB should be applauded for its efforts to bring some process and transparency to issuance of guidances.   

Recommendations 

  • OMB's definition of a "significant guidance document" applies to a guidance that may "[r]easonably be anticipated to lead to an annual effect of $100 million or more and adversely affect in a material way the economy or sector of the economy." Unfortunately, since guidances are legally non-binding, one could easily argue that even the most burdensome guidance imposes no cost at all. Therefore, we suggest that while assessing their economic impacts, guidance documents be evaluated as if they were binding regulations.
  • While it is very important that the GGP prohibit the use of terms such as "shall," "must," "required," or "requirement," in order to prevent a reader of a guidance from believing that it is binding, the exclusion of these "loaded" terms may not be enough. Therefore, we recommend that guidances include prominent, specific language, perhaps in a color other than the body of the document, which specifically states that the guidance is not binding and does not carry the force of law.
  • OMB's GGP do provide for a period of notice and comment during the drafting of guidances, but they do not provide for such a period between the issuance of the final draft and its taking effect. Therefore, we propose that the GGP include a small time period, perhaps 30 days, between the issuance of the final draft of a guidance and its taking effect.